Sports Direct agree to independent review after shareholder pressure

The '360 degree' review of governance and working practices was initially to be led by Sports Direct's lawyers RPC but will now be conducted by an "independent party" following discussions with shareholders

Sports Direct has has announced a review of working practices and corporate governance will be conducted independently following concerns raised by shareholders.

The so-called “360 degree” review was initially to be led by the retailer's law firm Reynolds Porter Chamberlain LLP (RPC), who had also compiled a recent Working Practices Report published ahead of Sports Direct's annual general meeting.

Sports Direct said the 360 degree review “will now be led by an independent party other than RPC”.

Adding: “The board has made this decision after listening to shareholder feedback at the recent AGM/Open Day and during subsequent consultation with a number of the company's long-standing shareholders via the Investor Forum.”

The move follows a rebellion by independent shareholders at the recent Sports Direct AGM, which saw 53 per cent oppose the re-election of chairman Keith Hellawell.

The company has faced criticism over working conditions and corporate governance.

Last month the Investor Forum, which holds a 12 per cent stake in Sports Direct, issued a rare public statement outlining its concerns about the working practices at Sports Direct and the influence founder and 55 per cent shareholder Mike Ashley has on how the group operates.

Sports Direct published the Working Practices Report the day before its AGM, in which it identified “serious shortcomings” in working practices in its warehouse operations and how it handles HR issues, including “unacceptable but unintentional” breaches of National Minimum Wage rules.

The retailer stated on the eve of its AGM it would offer directly employed retail staff the option of guaranteed minimum hours over zero hours contracts, though agency warehouse staff,whio make up the bulk of staff at its Shirebrook warehouse, are not eligible.

Sports Direct said the Working Practices Report, launched in response to issues raised when founder Mike Ashley faced the Business, Innovation and Skills Committee in June, would act as a “benchmark for a further 360-degree 12-month Comprehensive Review to be put before shareholders in 2017”.

The union Unite's assistant general secretary, Steve Turner, said: “At last Mike Ashley and his board have grasped that they need to take some very serious steps to restore shareholder, consumer and worker confidence in their employment practices.

“We have always urged, as we did at this year's AGM with the backing of investors, that an independent review is a vital component of this company truly getting to grips with its many and serious employment problems, so we are pleased that the company has now seen sense.

“We offer every assistance in the next steps in Sports Direct's journey towards fair employment, including with this review, and call on Mr Ashley to recognise the benefits of working with the union during this process as an essential way to build faith with the workforce.”